Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (3) TMI 646 - ITAT MUMBAI

2015 (3) TMI 646 - ITAT MUMBAI - TMI - Computation of interest u/s.244A - AO did not allow interest on interest - CIT(A) confirmed the action of the AO - Held that:- When the refund of tax becomes payable as a result of orders passed in appeal or other proceedings under the Act, this refund is to be given along with interest, which is to be calculated as per sec. 244 of the Act. If that interest is paid along with the excess tax, no further payment is to be made. It is only when the excess amoun .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

due" to the assessee on which the assessee can claim further interest. Such a situation has not happened in the present case as the amount of interest is calculated and refunded along with the refundable tax amount.

The Hon'ble Supreme Court has made adverse remarks about the decision of Sandvik Asia Ltd. [2006 (1) TMI 55 - SUPREME Court] in the decision of Gujarat Fluoro Chemicals [2012 (8) TMI 740 - SUPREME COURT], wherein held that it is only that interest provided for under the s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. Rachana Kanoi For the Respondent : Shri Asghar Zain ORDER Per R. C. Sharma (A. M. ) This is an appeal filed by the assessee against the order of CIT(A), dated 15-2-2013 for assessment year 1999-2000 in the matter of order passed u/s.254 of the I.T.Act dated 11-10-2010. 2. The only grievance of the assessee relates to computation of interest u/s.244A. 3. Rival contentions have been heard and record perused. Facts in brief are that the assessee is a company. In the case of assessee, an order giv .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

O at ₹ 5,71,279/-. 4. By the impugned order, the CIT(A) confirmed the action of the AO after having the following observations :- I have considered the above submissions of the appellant and the order of the AO. Since, the issue related to working of interest was factual, the comments of the AO were called for vide letter No. CIT(A}-17/Appellate Proc./2011-12, dated 11.10.2011 wherein the submissions of the appellant were sent to the AO for his comments. The comments of the AO were receive .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on 26.03.2002, 11.11.2003 and 11.10.2010 respectively. The assessee is relying on the Supreme Court's decision in case of M/s. Sandvik Asia Limited vs. CIT (2006) 280 ITR 643 wherein the Hon'ble Court directed to pat compensation in the form of interest for inordinate delay in paying interest on the advance tax to the assessee. The contention of the assessee is not acceptable for the following reasons: (i) The assessee is heavily relying upon the above quoted decision of the Apex Court. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

it is adjusted against the liability created by the Assessment Order and becomes tax paid pursuant to the Assessment Order....." ": .... We say no more. With respect, we are of the view that Sandvik Asia (Supra) has not been correctly decided. In the circumstances, we direct the Registry to place this matter before Hon'ble the Chief Justice on the administrative side for appropriate orders." Thus, it is requested that no relief may be granted solely on the basis of decision o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

interest for AY 1999-2000 which is governed by the provisions of section 244A of the Act. Also, the court was dealing with the interest on interest paid on the advance tax. While in the instant case the assessee is seeking interest on interest paid against the taxes paid in regular demand after assessment. Moreover, the Hon'ble Court granted interest as a compensation for inordinate delay of two decade in paying the interest as per the provisions of Act and unlawfully withholding the assess .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

al directions of the Hon'ble Court in para 43 of the order which is reproduced a sunder: "The assessment years in question in the four appeals are the assessment years 1977-78, 1978-79, 1981-82 and 1982-83. Already the matter was pending for more than two decades. We, therefore, direct the respondents herein to pay the interest on ₹ 40,84,906/- (rounded off to ₹ 40,84,900/-) simple interest @ 9 per cent p.a. from 31st March, 1986 to 27th March, 1998 within one month from tod .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee appeal to grant interest on interest may not be allowed." 4.4 A copy of this report was given to the appellant and his reply was received on 12.02.2013 which is as under: "The AO relied upon the ruling in the case of CIT vs. Gujarat Fluro Chemical reported in 24 Taxmann 338 (SC) (2012) where the authenticity of ruling in the case of Sandvik Asia, has been doubted, and Chief Justice has been requested for appropriate order at the Administrative side. In this regard, we most respectfu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e further submit that when the department itself charge interest on interest why the same ,should not be allowed to the assessee. We would also draw your kind attention towards various other rulings relied upon under our letter dated 09.09.2011. In view of the above, we would request your honour to direct the AO to allow interest uh 244A till date and to issue further refund as claimed." 4.5 I have considered the submissions of the appellant and the order of the AO. The Hon'ble Supreme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sessment Order. If Advance Tax or TDS loses its identity and becomes tax paid on the passing of the assessment order, then, is the assessee not entitled to interest under the relevant provisions of the Act. In this connection, we may refer to the provisions of section 195(1), 195A, 214, 219, 237, 243 and 244 which stood at the relevant time. They are as under: 195. (1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest or any other sum .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rest Payable Account" or "Suspense Account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. 195A. Where, under an agreement or other arrangement, the tax chargeable on any income referred to in the foregoing provisions of this Chapter is to be borne by the person by whom the income is payable, then .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ich they are payable under sections 207 to 213 exceeds the amount of the 5[assessed tax) from the 1st day of April, next following the said financial year to the date of the regular assessment for the assessment year immediately following the said financial year, and where any such instalment is paid after the expiry of the financial year during which it is payable by reason of the provisions of section 213, interest as aforesaid shall also be payable on that instalment from the date of its paym .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

terest was payable under sub-section (1) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and in a case where the interest is reduced, the 9[Assessing) Officer shall serve on the assessee, a notice of demand in the prescribed form specifying the amount of the excess interest payable and requiring him to pay such amount; and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd credit therefor shall be given to the assessee in the regular assessment: Provided that where, before the completion of the regular assessment, a provisional assessment is made under section 141A, the credit shall be given also in such provisional assessment. 237. If any person satisfies the [Assessing) Officer that the amount of tax paid by him or on his behalf or treated as paid by him or on his behalf for any assessment year exceeds the amount with which he is properly chargeable under thi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Central Government shall pay the assessee simple interest at [fifteen) per cent per annum on the amount directed to be refunded from the date immediately following the expiry of the period of three months aforesaid to the date of the order granting the refund. Explanation.-If the delay in granting the refund within the period of three months aforesaid is attributable to the assessee, whether wholly or in part, the period of the delay attributable to him shall be excluded from the period for whi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssee in pursuance of an order referred to in section 240 and the [Assessing] Officer does not grant the refund within a period of 3[three months from the end of the month in which such order is passed], the Central Government shall pay to the assessee simple interest at 4[fifteen] per cent per annum on the amount of refund due from the date immediately following the expiry of the period of 5[three] months aforesaid to the date on which the refund is granted. (1A) Where the whole or any part of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

specified in sub-section (1) on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted: Provided that, where the amount so found to be in excess was paid in instalments, such interest shall be payable on the amount of each such instalment or any part of such instalment, which was in excess, from the date on which such instalment was paid to the date on which the refund is granted: Provided further that no interest under this sub .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to be due as a result of the appeal or further proceeding for the period commencing after the expiry of 8[three months from the end of the month in which the order referred to in section 241 is passed] to the date the refund is granted. (3) The provisions of this section shall not apply in respect of any assessment for the assessment year commencing on the 1st day of April, 1989, or any subsequent assessment years." We say no more. With respect, we are of the view that Sandvik Asia (Supra) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Hon'ble Delhi High Court in the case of The Motor & General Finance Ltd. VS CIT-6, Delhi has held on 30.10.2009 as under: "13. When we examine the facts of the present case, we feel that the aforesaid judgement of the SC would not come to the aid of the assessee and permit the assessee to claim interest on interest in the given situation. As far as the appeals at hands are concerned, it is not in dispute that on filing the return by the assessee and processing the case under se .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t even as per the reduced demands, certain payments were still due. It is only after the orders of the Tribunal that the refunds became payable. The appeal effect, i.e. the effect to the order of the Tribunal, was given by the AO and the amount which was determined, to which the assessee had become entitled as refund was paid in entirety along with interest within the statutory period. In this background, let as scan through the relevant provisions relating to refund of tax contained in sections .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed to be made, the refund: if any, shall become due only on the making of such fresh assessment; (b) the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee. 243. Interest on delayed refunds-(l) If the Assessing Officer does not grant the refund,- (a) in any case where the total income of the assessee does not consist solely of income from interest on securities or dividends, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

anation.-If the delay in granting the refund within the period of three months aforesaid is attributable to the assessee, whether wholly or in part, the period of the delay attributable to him shall be excluded from the period for which interest is payable. (2) Where any question arises as to the period to be excluded for the purposes of calculation of interest under the provisions of this section, such question shall be determined by the Chief Commissioner or Commissioner whose decision shall b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aforesaid to the date on which the refund is granted. (lA) Where the whole or any part of the refund referred to in sub-section (1) is due to the assessee, as a result of any amount having been paid by him after the 31st day of March, 1975, in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, as the case may be, und .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o the date on which the refund is granted: Provided further that no interest under this sub-section shall be payable for a period of one month from the date of the passing of the order in appeal or other proceeding: Provided also that where any interest is payable to an assessee under this sub-section, no interest under sub-section (1) shall be payable to him in respect of the amount so found to be in excess. (2) Where a refund is withheld under the provisions of section 241, the Central Governm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oceedings. Section 243 deals with interest on delayed refunds. Such an interest becomes payable if the amount is not refunded within three months from the end of the month in which the total income is determined or within three months from the end of the month in which the claim for the refund is made under that chapter. Interest payable is @ 12% p.a. from the date immediately following the expiry of the period of three months aforesaid to the date of the order granting the refund: 15. No doubt, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g with the amount payable as refund, the question of payment of interest on interest does not arise. Present cases fall under this category. 16. In the present case, the order of the Tribunal would demonstrate that it had taken into consideration various dates on which orders were passed by the successive authorities, Including the order of efund. It has also taken into consideration the interest on the basis of those orders. Summary of interest allowed along with refund to the assessee as per t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

years. It was under these circumstances, the Court opined that withholding of interest was also unjustified as this had become part of the refund due to the assessee along with tax, interest on this amount was also payable. 8. It is, thus, manifest that at both the stages, namely, while passing intimation u/s. 143(1)(a) of the Act, refund along with interest u/s. 244(a), was given of the excess TDS and advance tax. Again, after the orders of the Tribunal were passed and the refund became payabl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

be made. It is only when the excess amount of tax is refunded but the interest is not refunded along therewith, the retention of interest amount would become unjustified and interest on interest would also become payable. The reason is simple. It is the tax which was paid in excess by the assessee which became refundable. The assessee would be compensated by paying interest thereupon. It is only when the interest is not refunded along with excess tax that the withholding of the said interest bec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t the assessee and as a consequence dismiss all these appeals with costs quantified at ₹ 5000/- per appeal (emphasis supplied)." 4.7 The Hon'ble Supreme Court has made adverse remarks about the decision of Sandvik Asia Ltd. in the decision of Gujarat Fluoro Chemicals. Therefore, following Gujarat Floura Chemicals and the decision of Hon'ble Delhi High Court in case of The Motor & General Finance Ltd. vs. CIT, the stand of the AO is upheld and the grounds of appeal of the a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version